Market Vectors Gold Miners ETF (ARCA:GDX) passed an important test of support yesterday. The goldies were looking absolutely dreadful yesterday morning, but buyers showed up near a crucial area of support around lunchtime and put the throttle to the floor into the close:
$18.75 not only represents a DeMark Support Level but it also represents a Fibonacci cluster:
Moreover, the candlestick pattern of a doji, followed by a larger, higher volume bullish candle with a higher low/high offers more than a glimmer of hope to gold mining bulls. If Friday turns out to be the low of an early-summer pullback we will have just witnessed a standard ABC correction of the March-May rally.
Sentiment on gold dipped last week back into fear territory which is generally supportive of a view that we are on the verge of a tradeable rally in the goldies:
In summary, if yesterday’s reversal is for real, we should see a strong move back above $19.25 over the next couple of days. Meanwhile, $18.75 represents important support which if breached could lead to another 5-10% of downside in a relatively short period of time. GDX is still trading with a range defined by $18.75 on the downside and $21.25 on the upside until further notice.